| Consider the stock exchange as the market place | | | | number of sectors of the economy and in the |
| where brokers and traders meet to trade stocks and | | | | process this will heighten growth.o The exchange can |
| other forms of securities. This is also a physical | | | | be used as well as platform for many companies to |
| location where brokers and traders can be provided | | | | expand through acquisitions and buy-outs. You may |
| with the right facilities and tools for the effective | | | | often hear and read in papers about companies |
| issuance and the redemption of securities and other | | | | merging and taking over another company.o |
| financial instruments. Securities that will be traded will | | | | Companies that are listed in stock exchanges are |
| come in either as the shares, the unit trusts, the | | | | known for better record-keeping and management if |
| derivatives, polled investment products and the | | | | compared to the privately-held companies since these |
| bonds. But for these securities to be traded, these | | | | publicly-held companies are liable to a number of |
| securities should be listed first on a certain stock | | | | owners. But this is not true in all cases, and as they |
| exchange. | | | | say for every rule there is an exemption. Remember |
| Speaking of listing the securities, often there is a | | | | 'Enron' of the early 2000s? The company was listed |
| designated location that can be used to record these | | | | as well on the stock exchange and owned by many |
| securities. But in terms of the actual trade, trades | | | | but still unethical accounting standards undermine the |
| between brokers and principals no longer just | | | | company.o The stock exchange opens the market to |
| happens in the physical location rather this can now | | | | small players since the exchange is designed in such a |
| happen over the internet. The advancement of | | | | way that a person can buy the number of shares |
| technology and the adoption of internet in effect | | | | that trader can afford.o And more importantly, the |
| democratize the trading system and give traders the | | | | stock exchange can also serve as an indicator if the |
| advantages that they need in the form of speed and | | | | economy is doing well or on a slump. So don't be |
| less cost in facilitating the transactions. | | | | surprised if analysts will say that the economy is on a |
| The stock exchange that is considered by many as | | | | slump when the stock market is a non-performer or |
| the most important component of the stock market | | | | down. |
| is known to perform a number of roles for the | | | | Right now there are around twenty major stock |
| economy.o The stock exchange used by companies | | | | exchanges in the world, with the New York Stock |
| and business organizations as platform to raise | | | | Exchange leading the list. The NYSE as it is called is |
| money for expansion or other purposes. Company | | | | labeled the 'Big Board and the largest exchange by |
| stocks are offered in order to expand their base and | | | | dollar volume traded. The rest of the largest |
| raise capital.o The exchange can mobilize savings that | | | | exchanges are scattered in North America, Asia and |
| can be used for investment. If money is used in the | | | | Europe. |
| stock exchange, the money can be used to benefit a | | | | |